Procedures and processes relevant to costs in dispute resolution

Question 1

General rule is that:

Answer 1

the unsuccessful party is ordered to pay the costs of the successful party.
The court, however, has discretion and can order otherwise.

Question 2

Costs include:

Answer 2

Solicitor’s fees
Disbursements such as expenses, court, counsel, and expert fees.

Question 3

Court can control costs under?

Answer 3

case management powers.

Question 4

Overriding objective that litigation be conducted justly and at?

Answer 4

proportionate cost.

Question 5

Parties’ conduct before and during litigation is relevant to costs orders and to?

Answer 5

assessment of costs.

Question 6

Unreasonable conduct CAN be penalised by?

Answer 6

costs sanctions

Question 7

Where the court orders a party to pay costs it can be either:

Answer 7

Make a summary assessment of the costs
OR order a detailed assessment of the costs by a costs officer.

Question 8

Summary assessment – fast track cases:

Answer 8

*Procedure by which the court, having made an order for a party to pay costs of a case or application, then goes on to decide the amount of money to be paid, instead of ordering fixed costs or detailed assessment.
*This is the normal practice on fast-track cases.
*Consideration of costs and summary assessment of costs takes place immediately following the end of the substantive aspects of the hearing.
*Conducted by the judge dealing with the hearing and is intended to be brief.
*Doesn’t involve the lengthy consideration of each item of cost claimed
(detailed assessment, which is a longer assessment process at the end of the proceedings).
*Costs determined in summary assessment are normally to be paid within 14 days of the date of the order UNLESS the court states otherwise.

Question 9

Detailed assessment – multi-track cases:

Answer 9

*Multi-track cases the court normally orders detailed assessment.
*Occurs where parties CAN’T agree costs.
*Procedure for detailed assessment:
Receiving party MUST serve notice of commencement, a copy of the bill of costs, fees of counsel/experts and any other disbursements on the paying party within 3 months of date of judgment or order.
Paying party can dispute any points in bill within 21 days.
If no points in dispute, receiving party can file a request for a default costs certificate entitling them to payment.
But if no agreement as to costs, receiving party MUST serve a reply within 21 days.
Paying party must then file a request for assessment hearing within 3 months.
Costs less than £75K, court will carry out provisional assessment.
Costs more than £75K, hearing with a costs judge.

Question 10

Small track cases are dealt with by?

Answer 10

fixed costs (fixed and assessed costs).

Question 11

End of a trial a party awarded costs by a costs management order:

Answer 11

Standard basis – recover the last approved or agreed budgeted costs UNLESS court directs otherwise.
Indemnity basis – costs are assessed in the normal way by the court, UNLESS agreed.

Question 12

Standard basis – court will consider every item of costs claimed and decide:

Answer 12

*Item was proportionately and reasonably incurred.
*Item was proportionate and reasonable in amount.
Any doubts are resolved in favour of paying party.

Question 13

Indemnity basis – court will decide if the costs were:

Answer 13

*Reasonably incurred
*Reasonable in amount
Any doubts are resolved in favour of receiving party.
No test for proportionality on the indemnity basis.

Question 14

Costs awards made on an indemnity basis work out higher than those made?

Answer 14

on a standard basis.

Question 15

Inter-partes cost orders - Interim:

Answer 15

These are cost orders in connection with interim matters.
Costs are summarily assessed at the end of the interim hearing.
Interim hearings include summary judgment, setting aside a default judgment OR striking out a party’s statement of case.

Question 16

Inter-partes cost orders - final:

Answer 16

Costs order at the end of the trial.
Costs order will be made on a standard basis or indemnity basis.
Court will consider the following factors in assessing the amount of costs:
Conduct of the parties (before and during proceedings).
Efforts made to try and resolve the dispute.
Value of any property involved.
Importance of the matter to the parties.
Complexity of the matter.
Skill, effort, specialised knowledge, and responsibility involved.
Time spent on case.
Place and circumstances in which the work was done.
Receiving party’s last approved or agreed budget.

Question 17

A non-party can be liable for costs in exceptional circumstances where:

Answer 17

They have been substantially controlling proceedings
AND stand to benefit from the successful outcome of the proceedings.

Question 18

Part 36 offers:

Answer 18

*Offer to settle a claim which complies with the requirements in Part 36 of the CPR
AND which will have the consequences set out in the CPR.
*Part 36 offer provides a means of putting pressure on the other side to settle a case since the court will take it into account when deciding the issue of costs.
*Part 36 offer is made without prejudice save as to costs.

Question 19

Part 36 offer must be:

Answer 19

In writing and clear it is made pursuant to part 36.
Must state if it relates to the whole claim or part of the claim.
Must state if it includes any counterclaim.
Must state a relevant period (time period of no less than 21 days from when the offer is served and within the offer can be accepted without any penalty consequences).

Question 20

Accept the Part 36 offer they must serve a notice of acceptance on the party who has?

Answer 20

made the offer and must pay the agreed sum within 14 days.
Failing which judgment can be entered.

Question 21

Any party (claimant or defendant) can make a?

Answer 21

part 36 offer.

Question 22

Part 36 offers don’t apply to?

Answer 22

small claims.

Question 23

Defendant serves part 36 offer and claimant accepts -
Within relevant period:

Answer 23

Defendant pays claimant’s costs up to the date of the notice of acceptance on the standard basis.

Question 24

Defendant serves part 36 offer and claimant accepts -
Outside relevant period:

Answer 24

Defendant pays claimant’s costs up to the date of expiry of the relevant period on the standard basis, and then
claimant pays defendant’s costs from expiry of the relevant period to the date of the notice of acceptance on the standard basis.

Question 25

Claimant serves part 36 offer and defendant accepts -
Within relevant period:

Answer 25

Defendant pays claimant’s costs up to the date of the notice of acceptance on the standard basis.

Question 26

Claimant serves part 36 offer and defendant accepts -
Outside relevant period:

Answer 26

Defendant pays claimant’s costs up to the date of the notice of acceptance on the standard basis.

Question 27

Claimant making a Part 36 offer:

Answer 27

Claimant makes a part 36 offer that is not accepted by the defendant BUT is awarded a sum that equals or beats the offer at trial, court can (if just) order the defendant to pay the claimant’s costs on the indemnity basis from the date of the relevant period expired and with:
*Interest on those costs of up to 10% above base rate.
*Interest on the whole or part of any sum of money (excluding interest) awarded at up to 10% above base rate for some or all of the period starting from the date when relevant period expired.
*Additional amount of 10% of the first £500,000 of damages awarded,
OR 10% of the first £500,000 of costs where there is no monetary award,
AND 5% of any amount above those figures, subject to the limit of £75,000.

Question 28

If claimant is successful at trial but is awarded a sum less than the Part 36 offer
OR if the claimant loses the trial…

Answer 28

the Part 36 offer will have no effect and no sanctions will be imposed.

Question 29

Defendant makes Part 36 offer, and the claimant wins at trial and:

Answer 29

*Claimant beats the defendant’s Part 36 offer; the Part 36 will have no effect and no sanctions will be imposed.
OR claimant fails to beat the defendant’s Part 36 offer, then a ‘split costs’ order can be made:
Up to the expiry of the relevant period the defendant will pay the claimant’s costs on the standard basis.
From the expiry of the relevant period to the date of judgment the claimant will pay the defendant’s costs on the standard basis AND will pay interest on those costs.

Question 30

Defendant makes a Part 36 offer, and the claimant loses at trial, the court will order the defendant’s costs be paid?

Answer 30

on the standard basis with interest as they failed to accept the Part 36 offer.

Question 31

Security for costs:

Answer 31

*Order for security for costs offers protection to a party (normally a defendant) where there is a risk their opponent WILL NOT be able to pay the party’s litigation if ordered to do so.
*The defendant SHOULD apply as follows:
Submit a notice of application (Form N244) with witness statement in support.
Persuade the court an order is necessary within one of the following grounds:
Claimant is resident outside E&W but ISN’T resident in a state bound by the Hague Convention.
Claimant is a company and there is reason to believe that it will be unable to pay the defendant’s costs.
Claimant has taken steps regarding their assets that would make enforcement of a costs order more difficult.
Justify the amount sought in security for costs.

Question 32

Security for costs -
If granted?

Answer 32

order will require the opposing party to pay money into court (or provide security in lieu such as bond or guarantee).

Question 33

Security for costs -
An application for the court to order security for costs can be made:

Answer 33

Defendant against a claimant.
Claimant facing a counterclaim.
Respondent to an appeal against an appellant and by an appellant against a respondent who also appeals.
Defendant against someone other than the claimant.

Question 34

Security for costs -
Party seeking security for costs should be aware of the following:

Answer 34

Security for costs only available in proceedings, not pre-action.
Security for costs ISN’T available for small claims.
Claimant CAN’T apply for security of costs solely regarding an interim application by the defendant.
Delay in applying for security for costs can result in no security being granted
OR the applicant being deprived of some or all of the costs that they have already incurred.

Question 35

Fixed costs in litigation are specific amounts (prescribed by the CPR) that are?

Answer 35

recoverable by one party from another in certain circumstances in litigation.

Question 36

Either the amount, or the method of calculation of the amount, is?

Answer 36

prescribed

Question 37

Fixed costs apply in straightforward cases such as:

Answer 37

Uncontested cases.
Enforcement proceedings
Small claims

Question 38

An order for fixed costs normally comprises both:

Answer 38

An applicable court fee that has been paid by the party awarded costs.
Fixed sum for the particular circumstances set out in tables in CPR 45.

Question 39

Fixed costs regime will apply UNLESS?

Answer 39

the court orders otherwise.

Question 40

There is no order for fixed costs, amount of costs to be paid will be assessed by the court if?

Answer 40

the parties CAN’T agree the amount.

Question 41

Amount of costs will be decided by a judge in accordance with?

Answer 41

assessment principles and guidance.